You're not "doing it wrong". First, you can't see how those two ducks may seem to be swimming placidly on the water -- but that their feet are paddling like mad underwater. Second, there is always someone out there who will give you credit if you will live by their terms (which may mean exorbitant interest rates, automatic payments, etc.). You also don't say if your BIL/SIL are planning for the future (tuition, etc.) at all.

I'd say it sounds like you have a good plan for now and for the future -- and that you should be applauded for not being a spendthrift and sticking other people with your bills.

You might want to accumulate some good credit history now, even with something small (like an appliance or furniture bought on credit even if you have the $$). Having no credit history is, in today's terms, as bad as having a negative one. (Yeah, it's crazy, but when an entire economy is fueled by consumption, that's what happens.)

The percentage, to some extent, depends on where you live. Lenders and landlords in very expensive locations (like California or urban New England) expect that more of your income will go to housing simply because it is pricier there than average.

About three years ago, when I last went for a mortgage in a medium-priced city, the requirements were no more than 33% of gross income or 28% of net, with "long-term debt" (that is, debt owed monthly for more than one year) subtracted from either figure. IOW, if you had that $300/mo. truck loan, that amount would be subtracted from your monthly income because that's money already committed to another purchase.

sweets98,

Sounds to me like you're doing your best to get yourselves ahead. I applaud your efforts, and your responsible attitude.

Some people seem to feel that they need a lot of things around them in order to feel of worth.

But, as you say, your in-laws have declared bankruptcy - as someone said, forcing someone else to pay for part of their good time.

My Dad, who died 20 years ago, at age 85, would say that's not honourable.

What kind of interest rate are you paying?

Is there a bank, or, more likely, a credit union in your area, who would lend you the money that you need at a lower rate of interest to pay off your existing loan?

Good wishes to you and your family - I hope that you can get a good portion of that loan paid off this year.

ole joyful

Yes, I guess I can go to bed at night knowing we're doing things the right way. :) It's going to take time but this will work out for us!

Oldjoyful,
The loan is in collection at this point. It's from back before or right after I started dating my DH. I still don't get it but he had a truck that was almost paid off. He went and purchased another used truck from a friend that has a car lot. It seems to me that DH got a truck loan for the truck he was purchasing but it must not have been for quite enough and he needed a small second loan? It's either that or it appears that DH never got a trade-in for the old truck! Anyway, DH didn't know what he was doing and added on other extra crap like insurance for items he owned the second loan (which really didn't amount to much of anything). DH was terrible about paying bills back then so things snowballed and eventually the truck was repoed. We paid the loan off last year for the repoed truck and have this one to go. We can either continue to make payments monthly for the next year or take a settlement at this point and we're hoping to do that come tax time with our return. Then we'll be free and clear :)

Sounds like DH was "upside down" on his first truck loan. It's what happens when you sell a vehicle which has a lower trade-in value than what you owe on the loan. Many dealers will accommodate that by adding the difference to the new loan -- putting you upside down (or further upside down) on the new vehicle. It also means you don't have any equity in the old vehicle to use as a down payment on the new vehicle.

BTW, with typical loan rates (that is, not 0.0% or 1.9% financing), most five-year vehicle loans remain upside down for more than three years. :-o Many people don't know that. More of them should.

"DH's brother and SIL have been together for about 3 years longer than us. They have two kids, too. BIL makes only about $3000 more year than DH. They just filed bankrupcty a little over a year ago. They have credit cards, a truck loan (it was used but it's still a loan)that they just purchased in about August and they will be signing on their home this Friday."

If I was them, I could not sleep at night knowing what all was owed and the financial responsbility of a families 'needs' as well.

Don't be surprised when the house is lost (due to just barely making it and getting behind), or the truck being lost, or worse yet, their financial mess causing them even bigger troubles.

Just my 2 cents.

There are folks who 'appear' to have it all. The only problem is that they don't own any of it and are stressing with just trying to make minimum payments.

I wonder if they might be renting to own their furniture as well. They seem the sort.

Chemocurl,
How did you guess? LOL I know they have rented living room furniture and bunk beds in the past, maybe even a TV if I remember correctly. The best part was that they would "Trade-in" the furniture just about every year. They recently gave it up and took some second hand furniture that is in great shape. So they spent how many years and how much money on furniture they no longer have and have nothing else to show for it!

I just read about that stuff the other day. That the way the rent-to-own places are set up, they don't have to have their interest rates regulated by the gov't. The article said that you could spend $934 on an endtable that cost $80 at a furniture store!

I can't imagine the money they threw away over the years!

LOL

Renting furniture is a very easy way for (almost) anyone to get very instant gratification. I just guessed that they were not very savvy financially at all...were overextended...owned 'NOTHING', and never even figured up what anything really cost them. Instead they are more concerned or happy to get such and such for 'just' X number of $$$$ per month.

I refer to folks such as that as not being able to see past the end of their nose. They surely are not looking into the future and all the woes the payments will most probably bring because they have overextended themselves.

People who rent furniture are right up there with those who think they are gonna win the lottery (if they play enough and long enough). It really is quite sad.

Sue

sweets98,

If someone doesn't know how (or is too lazy) to manage money ...

... somebody else'll do it for him/her.

Some charge reasonable rates.

Some charge somewhat more.

Good for you - learning how the money game works. One does it a few steps at a time - then one doesn't get all out of breath (or feel intimidated).

Keep up the good work.

ole joyful

When I figure "Housing" in my budget, I include *everything* to do with the roof over our heads because all are related and absolute necessities.

Mortgage
RE Taxes
Insurance
Utilities (including cable TV/Internet)
Landscaping (including tree trimming & snow plowing)
Maintenance

It's 36% of my budget, which I figure on gross income, including State and Federal Taxes as a budget item -- in fact, every expense that comes out of my checkbook is in there.

A long time ago a tax atty told me to pass everything through a single checkbook, and it does make record keeping simple. One year I put some medical expenses on charge cards and had a terrible time tracking the paid and unpaid statements; never again.